Balance of payments – commentary

2024 Q1

The current account ended 2024 Q1 in a surplus of CZK 104.7 billion. The financial account recorded an outflow of funds (net lending) of CZK 88.4 billion owing to higher growth in foreign assets than foreign liabilities. The CNB’s reserve assets increased by CZK 52.2 billion (adjusted for valuation differences). The current account surplus was 1.3% of GDP on an annual basis and the goods and services surplus was 5.9% of GDP.

The current account

Ratio of Current Account and Goods and Services Balance to GDP
(CZK billions, right-hand scale in %)

Note: Indicators calculated on the basis of annual moving aggregates

The goods and services balance recorded a surplus of CZK 160.2 billion in Q1. The balance improved by CZK 54 billion year on year at current prices due to a decrease in goods imports (index 97.1) compared to a slight increase in exports (index 101.4). The goods balance ended in a surplus of CZK 131.9 billion, up by CZK 50.8 billion from a year earlier. The services balance also showed a surplus (CZK 28.3 billion), representing a year-on-year increase in the surplus of CZK 3.2 billion. This was due mainly to a drop in imports of transport and insurance services and increased exports of telecommunication services. In foreign travel, higher domestic demand was reflected in a drop in the surplus amid a year-on-year increase in exported and imported tourism services. The total goods and services turnover at current prices was down by 0.7% year on year in Q1, amid a rise in exports of CZK 18.5 billion and a decline in imports of CZK 35.5 billion.

The primary income deficit was CZK 62.1 billion in Q1. Its year-on-year increase of CZK 12.1 billion was due mainly to lower net income from the EU budget recorded under primary income. Dividends on direct and portfolio investment paid abroad amounted to CZK 8.7 billion, a year-on-year decrease of CZK 8.9 billion.

Secondary income ended Q1 in a surplus of CZK 6.6 billion, representing an improvement of CZK 26.2 billion on a year earlier. The rise in the surplus was positively affected by higher net income from the EU budget recorded under secondary income. 

The capital account

The capital account ended Q1 in a surplus of CZK 4.0 billion. The year-on-year drop in the surplus of CZK 8.3 billion was due to a decrease in income from the EU budget recorded on the capital account. The drop in this income was partly offset by a surplus on trading in emission allowances.

The financial account

The financial account (including the change in the CNB’s reserve assets) recorded a net outflow (net lending abroad) of CZK 88.4 billion in Q1 owing to external assets increasing more markedly than external liabilities.

Ratio of Financial Account to GDP
(CZK billions, right-hand scale in %)

Note: Indicators calculated on the basis of annual moving aggregates

Foreign direct investment saw a net inflow of funds totalling CZK 30.7 billion. The main factor on the liabilities side was growth in the share of foreign owners in reinvested earnings in domestic firms. The asset-side transactions consisted mainly of the provision of loans to foreign affiliated companies, along with purchases of foreign shares and an increase in the share of reinvested earnings by domestic owners in foreign subsidiaries.

Portfolio investment recorded a net outflow (net lending) of CZK 43.1 billion. This was due to purchases of foreign shares and ownership interests by non-bank domestic investors, which represented an increase in assets of CZK 36.4 billion. Liabilities simultaneously declined by CZK 6.7 billion due to the repayment of part of domestic bank bonds held by non-residents.

Derivatives trading recorded an inflow totalling CZK 7.1 billion.

Other investment saw a net outflow (net lending) of CZK 30.8 billion.

This was largely due to the foreign exchange position of the banking sector (including the CNB), which recorded a rise in deposits and loans provided abroad. The net outflow of funds was CZK 17.9 billion.

The external position of general government recorded a net outflow of CZK 3.1 billion, due mainly to the provision of a long-term loan abroad.

As regards other sectors, a rise in short-term assets abroad was the determining factor. The net outflow of funds abroad was CZK 9.8 billion.

The CNB’s own transactions and transactions for CNB clients resulted in an increase in reserve assets of CZK 52.2 billion (adjusted for valuation differences).